The U.S.-China trade war has thrown global markets into turmoil, but while many stocks are expected to decline sharply, defensive positioning could offer investors a safe harbour. As tensions between the world’s two largest economies escalate, investors are increasingly shifting towards resilient sectors and companies less exposed to international trade volatility.

Here is a full breakdown of the safe stocks and sectors to watch during the ongoing U.S.-China trade war.

Understanding the U.S.-China Trade War Impact

The implementation of a 10% baseline tariff on all foreign goods by the United States, combined with a 54% tariff on Chinese imports, has sparked retaliatory measures from China. This new phase of the U.S.-China trade war has resulted in a $5 trillion wipeout from global equity markets.

While technology, automotive, and retail sectors are heavily exposed, some sectors are historically more resilient during trade conflicts.

Safe Sectors During the U.S.-China Trade War

Utilities:
Utilities are traditional safe-haven investments during periods of market stress. Companies like NextEra Energy (NEE) and Duke Energy (DUK) offer consistent revenue streams regardless of economic conditions. Their stocks typically exhibit lower volatility and could outperform as investors seek stability.

Consumer Staples:
Demand for essential goods remains steady even during economic slowdowns. Major players like Procter & Gamble (PG), Coca-Cola (KO), and Walmart (WMT) are expected to weather the storm better than discretionary sectors. These companies have pricing power and resilient business models.

Healthcare:
Healthcare is another defensive sector likely to attract investors. Firms such as Johnson & Johnson (JNJ), Pfizer (PFE), and UnitedHealth Group (UNH) have strong balance sheets and stable demand, making them safer bets during the U.S.-China trade war.

Gold and Precious Metals:
Gold is a traditional safe haven in times of uncertainty. Companies like Newmont Corporation (NEM) and Barrick Gold (GOLD) could see gains as gold prices rise amid heightened trade tensions and financial market volatility.

Top Safe Stocks to Watch Now

Procter & Gamble (PG):
With a portfolio of essential household brands, Procter & Gamble offers stability. Its global reach and ability to pass on price increases to consumers make it a strong defensive play.

Coca-Cola (KO):
Coca-Cola’s global brand recognition, combined with steady demand for beverages, positions it well to withstand economic slowdowns caused by the U.S.-China trade war.

NextEra Energy (NEE):
NextEra Energy focuses on renewable energy and utilities, providing predictable cash flows. Its regulated business model makes it less sensitive to global trade disruptions.

Johnson & Johnson (JNJ):
A diversified healthcare giant, Johnson & Johnson benefits from strong pharmaceuticals, medical devices, and consumer health divisions, helping to mitigate market risks.

Newmont Corporation (NEM):
As gold prices tend to rise during economic uncertainty, Newmont, the world’s largest gold miner, could offer strong upside potential.

Global Market Outlook

• The Nasdaq Composite is firmly in bear market territory.
• The S&P 500 and Dow Jones Industrial Average are poised for further declines.
• Defensive sectors like utilities, consumer staples, and healthcare are expected to outperform the broader market.

With volatility at extreme levels, investors should consider rebalancing their portfolios towards safe sectors and companies with strong fundamentals and minimal exposure to international trade.

Conclusion

The U.S.-China trade war has created significant challenges for global investors. However, by focusing on safe stocks such as Procter & Gamble, Coca-Cola, NextEra Energy, Johnson & Johnson, and Newmont Corporation, it is possible to navigate the turbulence with greater resilience.

Defensive positioning, diversification, and a focus on essential goods and services can help investors weather the storm and potentially emerge stronger when markets stabilise.